Key Takeaways:
- Credit reporting agencies are companies that collect information and manage information provided by lenders and compile that information into a credit report.
- Lenders may receive credit report information from credit reporting agencies to help them make lending decisions.
- Each credit reporting agency may have different information.
- The information in your credit reports is used to create a credit score.
Disclosure:
This post only contains educational information. No financial, tax or legal advice.
This information is for educational purposes only and we do not guarantee the accuracy or completeness of this information. This information does not constitute financial, tax or legal advice and you should consult your own professional adviser regarding your situation. This website may contain links to third party websites. We are not responsible for their content or data collection. Trademarks used in this material are property of their respective owners and no affiliation or endorsement is implied.
Credit reporting agencies play an important role in our financial system. They can help lenders decide who to lend to and help you keep track of your credit history.
What are the three credit bureaus?
The three nationwide credit reporting agencies, also known as credit bureaus, are TransUnion®, Equifax and Experian.
What do credit reporting agencies do?
Credit is an agreement in which a lender agrees to loan you money under a certain set of terms. Typically, you’re charged interest for the loan. Common types of credit include credit cards, mortgages and auto loans. Credit reporting agencies collect and share information relevant to your credit history. The primary role of a credit reporting agency is to help lenders assess whether they should extend credit to you.
Here’s a breakdown of what credit reporting agencies do:
1. Collect credit information
Information can be provided from lenders and companies about accounts such as:
- Credit cards
- Mortgages
- Auto loans
- Student loans
- Personal loans
This list is just an example of some credit accounts that you may see on credit reports. There are many different types of credit that can appear on your credit report. The information reported on these accounts can include your payment history, balances, account status (open, closed, delinquent, etc.) and more. Collectively, that information makes up your credit history.
2. Maintain credit reports
The data received from lenders is compiled into a credit report. If you have a credit history, each credit reporting agency has its own credit report for you. Your credit report may include:
- Personal information
- Credit accounts (open and closed)
- Public records
- Credit inquiries
Credit reports from each of the three credit reporting agencies may look or be organized differently, but they all gather the same types of information. Lenders can choose to provide information to one, two or all three credit reporting agencies, and lenders may provide updated information to the credit reporting agencies at different times. So the information in your credit reports may vary as well.
Pro Tip:
Each section of your credit report is important. Our free credit report guide breaks down each section, provides details about the information you’ll see and explains how the data may impact your credit score.
3. Provides information to lenders and others
When you apply for credit, the lender may request a credit report to analyze your credit history. Your lender is trying to gauge how likely you are to pay back your loan on time and in full. Your credit report, along with other factors, can help them decide whether to approve you for a loan and what the loan terms would be.
Your credit report may also be used by insurance providers to help them determine policy rates, landlords for rental screening, and even employers for a background check when permitted by law.
Only those who are legally permitted can view your credit report. This is called having a permissible purpose.
Important note:
Credit reporting agencies are information providers — not decision makers. Credit reporting agencies collect and maintain information related to your credit history and will provide that information to lenders, but lenders ultimately make the decision on whether to approve you for a loan and determine the loan terms.
How do credit reporting agencies update their information?
Credit reporting agencies receive updates from lenders regarding your account history. There is no standard day each month when your credit report is updated. Lenders tend to provide updates to credit reporting agencies once a month. However, lenders are not required to update on the same day. If you have multiple accounts from different lenders, your credit report will likely update multiple times each month.
Your report may also be updated when you apply for credit. When you apply for credit, a hard inquiry may appear on your credit report. A hard inquiry is an indication you may be shopping around for credit. An inquiry can stay on your credit report for up to two years, whether the loan was ultimately acquired or not. If the application results in a new account, that account may then start to appear on your credit report when the lender provides the loan information to credit reporting agencies.
What are the differences between the credit agencies?
As it relates to your credit report, the credit agencies may have different information, depending on where each lender provides information. Lenders can choose to report to one, two or all three credit reporting agencies. So information on your report can vary from agency to agency.
Common misunderstandings about credit reporting agencies:
| Misunderstanding | Reality |
|---|---|
| Credit reporting agencies decide whether you get approved | Lenders make approval decisions using your credit report and other factors |
| Credit reporting agencies directly control or change your credit score | Your credit score is based on information in your credit report — there are different scoring companies with their own models, but credit reporting agencies don’t decide your credit score |
| All credit reports are exactly the same | Your credit reports can differ because not all lenders report to all three credit reporting agencies, and lenders report information to the agencies at different times |
| You have to pay to see your credit report | You can access your credit report for free under federal law (see below to learn how to get your free credit report) |
| Credit reporting agencies track your income and put it on your credit report | Your income is not part of your credit report or credit score calculations |
Why is my credit score different at each credit reporting agency?
Your credit score is based on information in your credit report. Because each credit reporting agency may have different information and lenders may not provide updates on the same day, your score may vary depending on which report is being used for the credit score calculation.
Also, there are different credit scoring models. In general, credit score factors are similar across models, but there can be differences in how much weight the models place on certain factors. So, your score may be different based on which model is used.
When you get a credit score from TransUnion, it’s a VantageScore® 3.0 credit score. Here is a breakdown of the VantageScore® 3.0 credit score factors:
Credit Score Factors
Here are the factors that make up a VantageScore® 3.0 credit score and their relative impact:
- Payment history
- Utilization
- Balances
- Depth of credit
- Recent credit
- Available credit
How can I get a free copy of my credit reports?
You can get a free copy of your credit report from each credit reporting agency each week at AnnualCreditReport.com. You can see additional credit report options from TransUnion on our free credit report page.
Checking your credit reports regularly can help you stay on top of important information related to your credit health. Knowing how credit reporting agencies work and the role credit reports have in your financial life can make a difference as you prepare to take out a loan and plan for major financial decisions.
Credit Reporting Agencies FAQs
Your credit report is a record of your credit history. It includes hard credit inquiries, open and closed credit accounts, your payment history and bankruptcies (if applicable). It also contains personal information such as your current and former address(es), names and employers. All this information is part of your credit health. By managing it regularly, you can help ensure you’re accurately represented in the modern economy so you can get access to credit opportunities.
A credit report includes your personal information, like your date of birth, current and former addresses, names and employers, public records which include bankruptcies, open and closed credit accounts, collections and credit inquiries. If you choose to add a consumer statement to your credit report, it will appear on it as well.
When you have a financial account with a lender, they may submit account information to at least one of the three nationwide credit reporting agencies — TransUnion, Equifax and Experian. That information includes information about your account such as statuses and balances, as well as personal information such as name, address, employer and Social Security number. Additionally, when a lender checks your credit report in response to a credit application you submitted, that hard inquiry may be reported to the credit reporting agencies and show up on your credit report.
The federal Fair Credit Reporting Act (FCRA) limits who has access to the information on your credit report and how your report can be used. Companies must have a legal right to view your credit report, sometimes referred to as a permissible purpose. Examples of some types of companies that may have access to your report under some circumstances include:
- Landlords
- Utility companies
- Car insurance companies
- Employers
- Government agencies
- Collection agencies
- Other creditors
A credit report and credit score are not the same thing, and you usually won’t find your credit score on your report. Your credit report is a record of your credit activity and history, and it makes up an important piece of your credit health. You should manage it wisely so you can get more opportunities in the modern economy.
A credit score is a number that is calculated based on the credit information in your report such as credit usage, length of credit history, account mix and new credit accounts.
The score provided by TransUnion is based on the VantageScore® 3.0 model. Lenders use many different types of credit scores to make lending decisions.
